Embraer Rallies as Brazilian Currency Weakens: Sao Paulo Mover

Embraer SA, the Brazilian planemaker that has led gains on the Ibovespa equity benchmark in 2013, rose to a five-year high on speculation a weaker real will help boost revenue.

The shares gained 2.9 percent to 19.54 reais at the close of trading in Sao Paulo, the highest since February 2008. It was the best performance on the Ibovespa, which declined 2.1 percent. The real fell 1.4 percent to 2.1411 per dollar, extending its monthly plunge to 6.5 percent, as weaker-than-forecast Brazilian economic growth and rising U.S. bond yields lured money out of Latin America’s biggest country.

Almost all of Embraer’s revenue is denominated in dollars, meaning it should benefit more than other Brazilian companies from the real’s decline, according to Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora. “If this scenario is favorable to someone, it’s to exporters,” he said in a phone interview.

Brazil’s economy expanded 0.55 percent in the January-March period, the national statistics agency said on May 29. Gross domestic product increased less than the 0.9 percent median forecast of analysts polled by Bloomberg.

Embraer has surged 35 percent this year after announcing an agreement to sell jets worth as much as $8.3 billion to SkyWest Inc., an order of as much as $4 billion from Republic Airways Holdings Inc. and a $950 million contract with the U.S. Air Force.

The planemaker’s revenue rose 23 percent to 12.2 billion reais in 2012 from 2011, data compiled by Bloomberg show. Of that, 97 percent came from sales to other countries, according to information posted on the company’s website.

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